With the first quarter of 2014 on the books, investors are still digesting a slew of mixed economic reports, as well as looming uncertainty over the crisis in Ukraine. Equity markets have struggled to find a definitive direction so far this year – a vastly different environment from the record-breaking rallies seen at the end of last year. The commodities market also saw a fair amount of activity in Q1, as geopolitical tensions, severe weather, and global economic uncertainty (particularly in China) came into focus. Below, we outline some of the best and worst performing futures from the first quarter of this year [for more commodity news and analysis subscribe to our free newsletter]:
- Coffee: Futures for coffee have soared in recent months as Brazil–the largest producer of coffee–continues to experience abnormally dry weather. The drought has damaged coffee crops around the nation and has many concerned that next year’s harvest will be light, putting upward pressure on the commodity [see Why Coffee Futures are up 80% in 2014].
- Ethanol: This commodity has risen to its highest level in 32 months as congestion along U.S. rail lines, caused by severe winter storms, has impacted deliveries of ethanol. Ethanol prices at one point rose above gasoline prices; ethanol has not been more expensive than gasoline since 2011.
- Lean Hogs & Milk: The price of lean hog futures have risen in recent months as concern over a deadly virus in the U.S. hog population put upward pressure on prices. Class III milk futures have also soared – rising more than 30% year-to-date.
- Copper: Prices for copper futures are down roughly 10% on the year. The metal–often considered to be a key barometer of the Chinese economy–has taken steep hits as lackluster economic data from China weighs heavily on the market. Aluminum and iron ore have also struggled because of China’s slowdown [see also China's Slowdown Hits Commodities].
- Lumber: Recent underwhelming housing data combined with severe weather conditions has weakened demand for lumber, putting downward pressure on prices. In Q1, cold weather brought construction to a halt in many parts of the country; mills, however, continued to produce wood, which could affect prices in the future.
- Heating Oil: In February, prices for heating oil futures climbed as cold weather increased demand. In March, however, the commodity slid, losing roughly 3% as milder weather and temperatures put downward pressure on prices.
Disclosure: No positions at time of writing.